With the rapid development of the domestic retail industry, various retail formats are expanding quickly. Department stores, supermarkets, convenience stores, and warehouse clubs are aggressively expanding in major cities. Foreign and domestic capital are both establishing outlets in first- and second-tier cities. Convenience stores have become a notable segment in the retail landscape.

Domestic players: Several well-known domestic retail enterprises operate large convenience store chains. Examples include Shanghai Nonggongshang Supermarket's Haode and Kedi convenience stores; Shanghai Lianhua Group's Quick Mart; Wuhan Zhongbai Group's Zhongbai Convenience Stores; and Suguo Supermarket Co., Ltd.'s Suguo Convenience.

Foreign players: Japanese companies like Ito-Yokado's 7-Eleven, Uni-President Enterprises, and Charoen Pokphand Group have also entered the convenience store sector.

The author has participated in frontline sales management for a large convenience store chain in Central China. Over several years of practice, I have witnessed the rapid growth phase of convenience stores and faced the challenge of managing numerous stores. Through interactions with peers, I have seen that convenience store management is a significant concern.

Common issues include: "How can we manage so many stores with limited merchandisers?" "How do we handle distribution to hundreds of stores?" "The store is so small; there's no place for our products!"

In reality, especially after China's WTO accession gradually removed restrictions on foreign retail, domestic retail enterprises have been developing by "feeling for stones to cross the river." Manufacturers and distributors are also seeking more suitable management methods. There is a lack of experience and methods for convenience store management. Finding better management approaches is a pressing need for frontline sales managers.

Currently, domestic convenience store chains are in their infancy. Their operational management and market positioning are somewhat vague. Procurement methods, operating models, and product assortments are not significantly different from large supermarkets. Management cannot rely solely on the convenience store's own mechanisms. Manufacturers and distributors must rely on their own management teams and methods to fill the gaps. So, as the person responsible for a convenience store system, how do you understand the basic situation of each store? How do you lead merchandisers to manage hundreds of stores effectively?

Convenience stores are characterized by their large number of outlets, ranging from a dozen square meters to over a hundred square meters, scattered across dozens of streets and alleys in a city. Faced with such a daunting number of stores, how should a convenience store manager proceed?

Step 1: Understand the convenience store network—start with a city map. Purchase the latest city map. Familiarize yourself with the city's layout, including its main roads, districts (e.g., north/south of the river, east/west of the river), universities, development zones, subway stations, light rail stops, and bus stops. While learning the geography, cross-reference with convenience store data. Download or copy the latest store information (name, location, area, contact person) from the retail enterprise's website or internal system, and mark them on the map. This helps you understand both the store distribution and the city.

Step 2: Categorize the hundreds of convenience stores. Due to rapid expansion in recent years, convenience store chains have focused on scale over quality. Large chains may have hundreds of stores, but their quality varies. How do you identify and categorize the best stores? Proper categorization will provide clear direction for store management, promotional activities, and resource allocation.

Classify based on sales data. Table 1: Example of convenience store classification for a retail enterprise:

Key points:

  1. Analyze sales data for all stores over the past half-year or quarter, ranking from highest to lowest. Since stores may have opened at different times, use the average monthly sales over the latest three months to scientifically reflect each store's sales share.
  2. Identify stores that account for 80% or more of total sales. Why? The 80/20 rule applies here: roughly 20% of stores generate 80% of sales. The 80% figure is a reference; adjust it based on your actual situation. The principle is that a minority of stores contribute the majority of sales, so use this to identify key stores.
  3. Analyze each store's contribution rate, preferably using half-year or quarterly data. Classify stores into tiers based on contribution. For example, stores with sales above 5,000 yuan are A-class; 4,999–3,000 yuan are B-class; 2,999–1,000 yuan are C-class. Alternatively, stores with a contribution rate above 15% are A-class; above 8% are B-class; above 5% are C-class. These are just examples; adjust tiers flexibly.
  4. Divide stores by administrative district within the city. Assign dedicated personnel to each district.

Step 3: Build store profiles. Building detailed store profiles is crucial for management. Detailed profiles provide frontline information for managers and merchandisers. Managers can use them to plan reasonable visit routes and design promotions tailored to each store. Merchandisers can easily access store manager information, such as name, contact, and address.

Methods for collecting store information: A. Download or copy the latest store list from the retail enterprise's website or internal system. B. Have frontline staff (merchandisers, sales reps) record what they see and hear during visits.

Specific information to include:

  • Ideally, merchandisers should build store profiles through practical visits and follow-ups. This helps them understand store characteristics and build good relationships. The system manager can follow up based on information provided by merchandisers and create profiles. This is a good opportunity for both managers and frontline staff to familiarize themselves with the market.
  • Keep profiles updated, including any changes in store status, personnel, or surroundings, to ensure accuracy.

Step 4: Managing merchandisers. Currently, domestic retail enterprises often apply supermarket management methods to convenience stores, and market positioning is unclear. Relying solely on the retail enterprise's daily management is insufficient. Manufacturers and distributors must rely on their own merchandisers' daily visits to fill gaps.

  • Choose the right people. Convenience store work is tedious, requiring patience and attention to detail for tasks like stocking, display, and cleaning. Selecting suitable staff is beneficial.
  • Merchandisers should be "local experts" familiar with local customs, geography, and roads.
  • The FMCG industry is competitive, with thin margins, high labor intensity, and relatively low benefits, which affects recruitment. Married women aged 30–40 tend to be more stable. Convenience stores are service-oriented, serving both customers and store staff. This age group can bridge communication gaps and handle store issues with experience.

Method 1: Route management. This is the most effective tool to improve visit efficiency and time management. A chain may have hundreds of stores. How do you visit all of them within a cycle without missing any? Plan daily schedules carefully. A scientific route ensures balanced development of all stores.

Method 2: Process-based assessment. Many manufacturers and distributors assess merchandisers solely on sales volume, summing up sales from their assigned stores. This is incorrect and unscientific. Assessment indicators should emphasize key metrics like product display and shelf presence. Focus on terminal performance and attention to A-class stores.

See Figure 3 (not provided).

Key points:

  1. Formula for assigning stores to a merchandiser: Total stores in the area = daily visits × effective working days per week. For example, if a merchandiser visits 6 stores per day and works 6 days a week, they can cover 36 stores per month. Allocate stores accordingly.
  2. Merchandisers should plan their periodic visit routes carefully, considering store order days and delivery days. They must be present for ordering and receiving, so these should be included in the visit plan.
  3. Route design and assessment should emphasize A-class stores. Although A-class stores are few, they often account for over 50% of total sales. Visit A-class stores more frequently than B and C stores.
  4. Merchandisers should plan weekly routes in advance and record visits per store. At month-end, they should know how many times each A-class store was visited, and whether any stores were missed. The system manager can use weekly plans and monthly visit summaries to monitor maintenance frequency and ensure balanced attention.
  5. Convenience stores are spread across the city, sometimes just across the street or a block apart. Efficient transportation is key. Electric bikes and motorcycles are the most economical and practical options.

Step 5: Daily visits by merchandisers. Currently, daily visit procedures in FMCG companies are often designed for distributor visits, such as Pepsi's 8-step visit. These can be adapted for convenience stores, but should be tailored to the convenience store context.

Pre-visit preparation: Based on the planned route, schedule your day (weekly/monthly plan). Before leaving the office, know which stores you'll visit, their locations, the order of visits, the route, and what issues to address. Ensure you have all necessary tools (cloth, POP, tape, price tags, promotional gifts, order forms, etc.).

In-store visit steps:

  1. Enter the store: Greet the store staff. This signals that you are responsible for this store.
  2. Check product assortment: Use the product display sheet to check if your brands and products are fully stocked. This is the basic foundation for sales. For manufacturers/distributors with many brands and SKUs, a complete display sheet is essential.
  3. Check display standards and pricing: Are products fully displayed? Are there out-of-stocks or competitor encroachments? Are prices as specified? These are key terminal indicators.
  4. Check inventory levels: Ensure adequate stock for each product. Place orders for low-stock items to prevent out-of-stocks. Use methods like 1.5x safety stock, 80/20 analysis, and replenishment planning.
  5. Check product expiry and cleanliness: Are there any near-expiry products? Count them and plan promotions to clear them. In food and beverage, products past 2/3 of shelf life are considered "near-expiry." Merchandisers must check expiry dates and quantities.
  6. Execute promotions: Ensure company promotions are implemented. Communicate with promoters to ensure effectiveness. Utilize display resources like stack bases, end caps, and TG. Promotion effectiveness depends on terminal execution and store support.

Key points:

  1. If you identify problems, resolve them immediately. Always inform store staff before doing anything in the store. This not only alerts them but also shows respect. Acting without permission can offend people.
  2. Communicate tactfully. Avoid making demands immediately upon arrival. Store staff see many merchandisers daily; immediate demands can cause resentment. Build rapport first, perhaps by helping with tasks like tidying displays or cleaning shelves, then make requests. The saying "the local official is more effective than the central government" applies here.
  3. To get problems solved, store support is crucial. Lay the groundwork by promptly addressing store difficulties, such as handling expired or damaged goods.

Step 6: Designing promotions for convenience stores. Due to space and resource constraints, convenience store promotions may not match the scale of supermarket or hypermarket promotions. The primary goal is to generate actual sales.

Promotion types:

  1. Holiday promotions
  2. Buy-one-get-one (BOGO) promotions
  3. New store opening promotions
  4. Franchisee purchase promotions
  5. Group purchase promotions

Key points:

  1. Understand the convenience store's management culture and operations, such as promotion cycles, DM schedules, and major holiday plans. Know whether promotions are decided by the purchasing or operations department. Leverage this knowledge.
  2. For convenience stores, price promotions combining "special price + manufacturer week + DM" work best. In small stores, eye-catching DM ads at the entrance and prominent price tags on shelves attract consumers. Choose a few aggressive items, such as sanitary napkin combo packs or shampoo and conditioner sets, for these promotions.
  3. Due to the large number of stores, limit BOGO promotions to A-class stores unless other stores request them. Expanding BOGO too broadly makes it hard to manage staff and control gift flow.
  4. New store opening promotions are important. Some manufacturers and distributors neglect them, thinking new stores won't contribute much sales. This is a mistake. When a new store opens, chain management often visits. A well-executed opening promotion with a lively atmosphere can earn their approval and build a positive corporate image, leading to more support later.
  5. Franchisee promotions aim to boost franchisee purchasing. Convenience store chains often have a franchisee management department and a product showroom. Strengthen communication with this department, share new products and promotions, and maintain good showroom displays. This can yield long-term returns. Promotions can be buy-A-get-B, with gifts that are sellable in stores, like cooking oil, toothpaste, or toilet paper, which franchisees can sell for cash. This is similar to distributor purchase incentives.
  6. Group purchase promotions target enterprises and institutions near the stores. During holidays and school openings, these entities often make significant purchases. Since convenience stores are widespread, there are more opportunities. Develop a dedicated group purchase policy and service process, such as rebates for key contacts above a certain amount, free delivery for large orders, or buy-A-get-B/C options. Ensure groundwork is done: communicate the policy to stores, make sure key contacts can reach your merchandiser, and select appropriate gifts.

Common Questions and Answers for Convenience Stores

What products are suitable for convenience stores? Myth: Convenience stores are not hypermarkets or warehouse clubs. A typical store carries about 2,000 SKUs. Manufacturers or distributors may want to put all their SKUs on the shelves, including new and old products, aiming for full distribution. Reality: Many companies think more display means more sales. But convenience stores lack the shelf space and promotional resources of larger stores. The nature of convenience stores limits product display.

  1. Limited display space. Convenience stores typically range from 50 to 150 square meters, often in communities, schools, or busy areas. Their product mix is based on local needs, focusing on daily necessities that are economical. Product selection should be "few but fine."

  2. Capital tie-up. More products on display means more capital invested. Convenience stores also have payment terms. If products don't sell well or turn over slowly, they tie up valuable resources and strain the finances of manufacturers or smaller distributors.

  3. Risk of near-expiry products in food and beverage. Convenience store products often sell "naturally." Products with low awareness, or those not properly maintained, can become slow-moving, leading to near-expiry issues. Returns and clearance losses can be significant.

  4. New products should not enter convenience stores prematurely. In hypermarkets and supermarkets, new products can be listed relatively easily with proper documentation and fees. But convenience stores have limited display space and strict performance reviews, often using a "one-in, one-out" policy. If a new product lacks awareness and doesn't stand out quickly, it won't achieve satisfactory sales. Buyers won't keep slow movers on the shelf, nor will they use limited resources to nurture your new product.

Recommended strategy:

  1. Choose products that are "few but fine." "Few" means: Analyze your sales data by category, brand, model, and size. Select the top 1-2 SKUs by sales share and contribution. Then, based on convenience store metrics (gross margin, turnover, average transaction value, foot traffic), choose suitable products. Ideally, your SKU count in convenience stores should be within 30% of your effective SKUs. For example, if you have 100 SKUs in hypermarkets, limit to about 30 in convenience stores. "Fine" means: SKUs with strong "natural selling" ability—products that sell steadily without extra promotional support. A. High-awareness, essential items. B. Products in the mature or growth stage. C. Aggressive items like sanitary napkin combos, toilet paper, or pocket tissues. D. High-margin, premium brands.

Example: A certain brand's sanitary napkin product mix (not provided).

Key points:

  1. Convenience stores have a simpler profit structure than hypermarkets, which have both front-end and back-end margins. Most profit comes from product gross margin. Therefore, convenience store gross margins are typically 3-5% higher than hypermarkets. When proposing products, understand the buyer's gross margin requirements and select accordingly.
  2. Don't rush new products into convenience stores. They have strict performance criteria like turnover, margin, and awareness. Ideally, introduce new products after they've been listed in major hypermarkets like Carrefour or Walmart and have shown good market response. This gives buyers confidence and support.
  3. Convenience store promotions are limited. Products that rely heavily on promotional support, such as outdoor demos, free trials, or money-back guarantees, should be minimized.

What are the distribution options for convenience stores? There are two main distribution methods:

  1. Centralized distribution center. The convenience store chain has its own distribution center. Manufacturers or distributors deliver goods to the center based on store orders, and the center sorts and delivers to stores. Advantages: Large delivery volumes at once, handled by dedicated staff and vehicles (with city access). Saves time and effort for manufacturers/distributors. Disadvantages: Delivery is scheduled on fixed days, which may not accommodate urgent orders like group purchases. Also, the center may charge a distribution fee, which could be higher than self-delivery costs.

  2. Self-delivery by the manufacturer or distributor. Manufacturers/distributors use their own vehicles and staff to deliver directly to stores. Advantages: Flexibility and lower cost. You can plan deliveries based on store orders. Disadvantages: City traffic restrictions may limit large trucks in central areas, so small vans are often used, limiting delivery volume. Requires careful planning of routes and order cycles.

The choice depends on your situation. If you have fast-moving products, many categories, high order values, and strong resources, a distribution center may be suitable. If you have fewer products or brands, self-delivery might be better.

Key points (mainly for self-delivery):

  1. Estimate store sales: Merchandisers should calculate weekly sales by category, brand, and SKU for each store, and forecast next week's orders. Coordinate with delivery vehicle capacity and routes to avoid wasted trips.
  2. Plan efficient delivery routes: Delivery staff should arrange routes based on store locations to minimize empty runs. Merchandisers should budget weekly sales for different store classes. A and B stores might receive weekly deliveries, while C and D stores could be bi-weekly. Plan routes accordingly.
  3. Prepare thoroughly: A) Load products in the order of delivery, with first stops at the back of the vehicle. B) Clearly divide tasks to avoid omissions. C) On delivery days, merchandisers should prepare in-store for receiving, such as reserving storage space and notifying the receiving staff. Assist with receiving and put products on shelves promptly to avoid delays.

How to manage suburban convenience stores? Many convenience stores are located on the outskirts of cities, in urban-rural fringes or intercity areas. Compared to city centers, these stores are often seen as "chicken ribs"—not worth the effort.

"Tasteless": Purchasing power is weaker, populations are dispersed, and distribution and maintenance costs are higher due to larger distances. "Pity to discard": Although these stores may underperform, they often serve as "barometers" for rural markets, indicating local purchasing trends. Manufacturers can use them as model stores to cultivate markets and develop distributors. Distributors can use them to radiate influence and expand distribution channels.

Manufacturers and distributors should choose management approaches based on the number and distribution of suburban stores and their own capabilities.

Countermeasures:

  • Use local distributors for delivery, with delivery costs counted as rebates. Assign periodic visits and daily management to local offices or branches. Suitable for larger manufacturers.
  • "Point-to-area" approach: Initially invest in managing suburban stores, select a good downstream customer as the local distributor, and have them handle delivery and maintenance. Gradually transfer management to the distributor, with periodic visits and guidance to improve their capabilities. Suitable for smaller manufacturers or new market entrants.

Domestic convenience stores are currently in a development phase, facing various constraints such as urban construction, demolition, and competition from large supermarkets. Manufacturers and distributors should grasp the development trends. As the supermarket format evolves and upgrades, a new round of retail reshuffling is underway. Convenience stores will see stable growth, with upgrades in shopping environment and services. Trends include "fashion," "service," and "premium." Adapt to these changes and manage convenience store sales effectively.

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